CBS This Morning

CBS This Morning

Delta: August outage cost us $100M in revenue

ATLANTA - Delta Air Lines Inc. (DAL) said Friday that last
month’s computer outage, which caused it to cancel 2,300 flights, cost $100
million in lost revenue.

The airline also said that a key
revenue per mile figure fell sharply in August, partly because of the outage.

A fire and failure of a piece of
equipment at Delta’s Atlanta headquarters on Aug. 8 caused a massive outage of
the airline’s computer systems, temporarily grounding flights and leading to
three days of heavy cancelations and delays.

Rival Southwest Airlines Co. reported
lost revenue and extra costs totaling $54 million from a July outage that
resulted in a similar number of canceled flights.

Delta also reported that passenger
revenue for every seat flown one mile fell 9.5 percent in August compared with
a year earlier. Delta attributed 2 points of the decline to the outage.
Analysts said even without the outage, the number was slightly worse than
expected and worse than Delta’s forecast of a decline between 4 percent and 6
percent for the entire third quarter.

The revenue number indicates that
average fares are still falling. Fares have dropped since early 2015 because
airlines are adding flights and seats faster than the growth in demand.

This week low-fare Spirit Airlines
raised round-trip prices by $10, according to J.P. Morgan analyst Jamie Baker,
who said the move increased confidence that the domestic-flights revenue trend
will improve in the fourth quarter. Spirit is a relatively small airline, but
it influences prices that bigger airlines can charge on competing routes.

Delta shares rose 22 cents to $37.04
in midday trading Friday. They are down more than 19 percent over the past
year.